This gap, in 1981 dollar value, reached almost $3.5 billion in 2017. It is evident that from the mid-1990s, the size difference between the large and small increased continuously and rapidly, except for during the recession years of 2008-2009. In the chart below, you can see the annual, inflation-adjusted difference between the median market values of the largest and smallest public companies (the top 30% and bottom 30% of firms, by market value of equity), listed on U.S. Our results support Lou Gerstner’s thesis that the elephants are not basking in their past glory, but can indeed dance and are even becoming nimbler. And part of the reason for this growing corporate divide between big and small firms is the growing R&D expenditures of large firms. In particular, we wanted to see whether large established corporations are being increasingly displaced by new technologies, or whether they’re actually leveraging digital and other new technologies to innovate and grow.Ĭontrary to the popular notion, we find that large corporations are more and more likely to maintain their dominant positions, while small corporations are less and less likely to become big and profitable. While we’ve seen numerous startups of the last thirty years not only disrupt businesses but become the megacorporations of today, we wondered whether this disruption is accelerating with the momentum of digital revolution. Research and news headlines are replete with the idea that traditional large companies can’t innovate, and that smaller digital companies will render many larger ones extinct.
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